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Tuesday, March 20, 2012

California's tax man George Runner seeks to cap gas taxes

George Runner, California’s State Board of Equalization leader is seeking state lawmakers support to limit taxes on increasing fuel prices. Currently, Californians pay more than $4 per gallon, and Runner said capping the state’s gas tax could assist struggling families.

While President Obama claims there is no “silver bullet” to ease the pain Americans are facing at the pumps, Runner’s new proposal lays out a strategy to save all Californians some money when they fill up their vehicles.

“While taxes aren’t the only reason for rising fuel prices, they are part of the problem,” Runner explained. “As fuel prices rise, California consumers are paying more tax for less gas.”

“These sky-high fuel prices contain hidden taxes that drive up the price we pay at the pump. Each and every time fuel prices rise, our taxes go up too,” said Runner. “It’s time we draw the line on any further increases.”Only Hawaii, President Obama’s birthplace, slams residents with higher fuel prices than California, according to the Energy Information Administration. Even though Runner is no longer a state lawmaker, he continues to make an impact on issues that matter to Californians from his State Board of Equalization office.

The American Petroleum Institute keeps track of all the taxes states charge consumers, and once again, California ranks second in the nation. Its gasoline taxes and fees average 67 cents per gallon and diesel taxes (that’s used by most long haul trucks) average about 76 cents per gallon, the highest in the nation.

Included in California gas taxes and fees are a federal excise tax of 18.4 cents per gallon, an excise tax of 35.7 cents per gallon, a sales tax of 2.25 percent as well as applicable local taxes. For diesel, the federal excise tax is 24.4 cents per gallon, the state excise tax is 13 cents per gallon and the sales tax is 9.12 percent plus local taxes.

When it comes to gasoline, Runner says the sales tax is calculated on the total price of the fuel sale including excise taxes, resulting in double taxation. Yes, lucky California consumers “pay a tax on a tax.”

“Since the sales tax is calculated per dollar spent rather than per gallon of fuel, government coffers receive an unanticipated windfall when fuel prices rise,” Runner said. The facts support Runner’s case that lower levels of consumption do not translate to lower costs for taxpayers. In fact, California’s rising fuel prices has the opposite effect and state tax coffers collected $61 million more in taxes during the second quarter last year.

In 2010, California’s Legislature enacted a new law requiring the State Board of Equalization to lower the sales tax on gasoline and raise the excise tax by a corresponding amount.

In an attempt to neutralize the increasing gas tax revenues, Runner’s proposal would cap the excise tax on fuel at 35.7 cents and limit sales tax to the first $4 per gallon of gasoline. (The plan would also cap diesel taxes at current levels.)

Nationally, Democrat President Obama said he would ask lawmakers to end the $4 billion in oil and gas subsidies (these subsidies are currently offered to all corporations) in an effort to wean the nation of its fossil fuel use. In his weekly radio address, the President said he wanted lawmakers on the record if they want to support the oil industry. “They can either place their bets on a fossil fuel from the last century or they can place their bets on America's future (so-called green energy),” Obama said.

However, the green energy industry doesn’t possess the technology to produce reliable or economical automobiles to sustain Americans who must commute to work every day. Plus, most new expenditures on goods or services are usually passed onto the consumer.

“My proposed gas tax plan will not affect California’s budget. Sacramento is actually placing a windfall-like tax on the consumer. Many lawmakers are ignoring the fact that the government is profiting from higher fuel prices,” Runner explained in a phone interview. “This plan simply draws a line to help the struggling taxpayers.”

Weighing in on the high fuel prices, Lew Uhler, founder and president of the National Tax Limitation Committee, endorsed Runner’s proposal.

“Without limits, government always tries to take more and more of our money,” he said. “It’s time we said, ‘enough is enough.’ The double tax on gasoline – geared to price changes – creates a perverse windfall for the government big spenders precisely when rising gas prices hurt consumers the most. Capping the gas tax will help California taxpayers keep more of their hard-earned dollars where they belong—in their own pockets.”

Normally the State Board of Equalization does not involve itself in lawmaking policy, but Runner’s determination to protect the taxpayers he represents, said this double tax makes no sense.

“Capping fuel taxes could keep hundreds of millions of dollars in the pockets of California consumers, help consumer confidence and bolster California’s economy,” Runner said. He also pointed out that California would not lose any expected income as Governor Jerry Brown allotted revenue from lower fuel prices, $3.82, in his January budget.

Seeing the urgency of high gas prices coupled with daily complaints from taxpayers, Runner indicated legislation could be considered, debated and on the Governor’s desk by June. In the midst of a highly charged election year, Runner suggested reducing California gas prices benefits both political parties.

“I’m hopeful there can be bipartisan support for this proposed legislation, and we can ease the gas taxes as quickly as possible.”